One of the frequent talks that I give to small business owners who are just starting out is the concept of legal risk management. Part of that discussion with new business owners is really what should happen when something goes wrong with the business.
I advise to follow a five-step process.
The first thing is breathe. Take a deep breath. Things are rarely as bad as they seem when they first happen. As I often say (not completely tongue in cheek), unless you are dead, it can be fixed. The only real question is whether you want to fix it. As long as you’re alive, you are going to be in a position to address the problem. So, take a deep breath.
Next, assemble your management team. Even for small business owners, I recommend having a management team that includes a mentor(s), an accountant, a banker, an insurance agent, a lawyer, marketing specialists, maybe a trusted employee, and your significant other. These are people you can trust who you can get information from and know what information you still need to make an informed decision.
Third, work the problem. One reason for assembling a management team that includes people outside of your company is that they can focus on the problem. For small business owners, when a problem comes up it is personal. The business is personal. Problems in the business are often tied to the owner’s self-esteem, and even their economic existence. When we are too close to the problem, we start to get wrapped up in the emotion of the problem. Rather than addressing the core of the problem and what the issue is, our minds start spinning off in multiple directions and imaginary scenarios. Having a management team that is outside of the company allows them to objectively focus on the problem. I take this advice from the movie Apollo 13. After the “Houston, we have a problem” explosion, NASA Flight Director Gene Krantz, played by Ed Harris, admonishes his staff, “Work the problem people. Don’t make it worse by guessing.” Business owners should not make the problem worse by focusing on outside imaginations.
Fourth, make a decision. This is the one thing that the business owner and only the business must do. You’ve assembled a management team and they are now your advisors. Now this is the hard part: the business owner must make a decision and move on without doubt. It is the without doubt part that is hard. Theodore Roosevelt once said, “In any moment of decision, the best thing you can do is the right thing. The worst thing you can do is nothing.” Sometimes people attribute to Roosevelt the idea that the second-best thing to do is the wrong thing. I like the idea of the wrong thing also. When a business owner reaches this decision-making point and it is a big problem, there exists the potential for paralysis by analysis. Many people think that if they keep analyzing the problem, they might come up with another solution. However, business owners do not have that luxury.
Make the decision and move on. You’ve assembled a management team, they’ve given you advice. You can take their advice, or you can ignore it. You do what you think is best, but you must make the decision and move on. The consequences of your decision are going to come to fruition, or they won’t. That is the nature of business and decision making. You can analyze the decision-making process later, but you have to divorce that process from the actual decision. As Yoda famously said, “Do or Do Not. There is no try.”
Finally, step five: go back and repeat step one. Repeat these steps as necessary. Problem solving when things go wrong is a part of being in business. You should prepare a process of how you would like to address decisions when things go wrong, and when things go right.
Having a smart, simple game plan for managing these aspects of decision making and problem solving goes a long way. You can rehearse these steps with your management team by brainstorming scenarios and talk it out so that everyone is used to their roles in the problem-solving process.